Lowe’s CEO says the housing market is under pressure, even as the retailer’s sales jump more than 10%

Lowe’s topped Wall Street’s quarterly revenue and earnings expectations and posted more than 10% sales growth year over year on Wednesday even as the home improvement market’s struggles showed few signs of ending.

In an interview with CNBC, CEO Marvin Ellison said the home improvement retailer is “still dealing with a housing market that does not have a lot of tailwind.” A mix of higher inflation, economic uncertainty and elevated mortgage rates have created a “lock-in effect” for U.S. consumers who are staying put instead of buying and selling homes, he said.

“For us, the greatest fuel for the home improvement industry is when you decide to put your house on the market,” he said. “Because the first thing you do when you put it on the market is you fix up your yard, you repair your fence, you paint your walls, you do simple beautification modifications in your home.”

As the waiting game for stronger home improvement demand continues, he said Lowe’s strategy is resonating with do-it-yourself customers and home professionals. He credited some company-specific changes, such as better digital experiences, flexible delivery options and more installation services.

He said Lowe’s anticipates roughly flat demand for the home improvement industry this year. Its own full-year sales forecast is based on expectations that it will outperform the market, he said.

Lowe’s said it expects total sales for the full current fiscal year to range between $92 billion and $94 billion, which would be a roughly 7% to 9% increase over the prior year. It said it projects adjusted earnings per share to be between $12.25 and $12.75 for the full year. Lowe’s said it expects comparable sales, a metric that takes out one-time factors, to be approximately flat to up 2%.

Shares of Lowe’s were down more than 4% in midday trading on Wednesday as the company’s earnings per share projections for the year came in short of analysts’ consensus expectations of $12.95, according to LSEG.

Ellison told CNBC the company’s outlook is “appropriately conservative” because of the “very fluid and very unpredictable environment” it faces due to slower home sales and changing tariff rates.

Here’s what Lowe’s reported for the fiscal fourth quarter compared with Wall Street’s estimates, according to a survey of analysts by LSEG:

• Earnings per share: $1.98 adjusted vs. $1.94 expected
• Revenue: $20.58 billion vs. $20.34 billion expected

Lowe’s net income for the three-month period that ended Jan. 30 dropped to $999 million, or $1.78 per share, from $1.13 billion, or $1.99 per share, in the year-ago quarter. Excluding one-time factors, including expenses associated with recent acquisitions, Lowe’s reported adjusted earnings per share of $1.98.

Revenue rose from $18.55 billion in the year-ago period.

Comparable sales for the quarter climbed 1.3%, higher than the 0.2% that analysts were expecting, according to StreetAccount. The company said in a news release that growth was driven by its gains with home professionals, online sales and home services, along with a strong holiday season.

Lowe’s posted growth in nine of its 14 merchandising categories, said Bill Boltz, executive vice president of merchandising, on the company’s earnings call. Some of the categories and items that sold well are more closely tied to pros, such as sales of plumbing supplies like water heaters and millwork for windows and doors, Boltz said. Yet the company also saw strength with paint sales, as customers bought interior and exterior paint, primer and stains, he said.

Lowe’s results reinforce the housing market’s struggles a day after rival Home Depot said it is still seeing similar reluctance to take on big housing projects.

Home Depot on Tuesday beat Wall Street’s earnings and revenue expectations, but stuck by conservative full-year guidance. Its quarterly results reflected that home improvement demand remains tepid, as U.S. consumers continue to put off big projects because of high borrowing costs and housing prices as well as economic concerns.

Like Home Depot, Lowe’s has felt pinched by a tougher backdrop for the industry. Earlier this month, Lowe’s cut about 600 corporate and support roles, a move it said would free up resources to support stores. Home Depot in late January laid off 800 workers and said employees would have to work from the office five days a week.

Both have also looked to pros to drive growth by acquiring companies that cater to contractors, roofers, electricians and others who tend to be a steadier source of business.

Last year, Lowe’s acquired Foundation Building Materials, a distributor of drywall, insulation and other interior building products for large residential and commercial professionals, for about $8.8 billion. It also bought Artisan Design Group, which provides design services and installation of flooring, cabinets and countertops for homebuilders and property managers, for about $1.33 billion.

Lowe’s has also made its own moves to reach customers who are delaying home purchases, such as launching a third-party marketplace to expand its mix of merchandise, tapping influencers to raise its visibility on social media and reaching out to young families by relaunching its kids’ program.

Yet Lowe’s and Home Depot are still waiting for signs that U.S. consumers are ready to jump back in to buying, selling and fixing up their homes at a more typical rate.

Ellison said on the company’s earnings call that the company is closely watching if there’s a shift toward more pricier discretionary purchases.

“When we start to see a sustained number of discretionary big-ticket purchases from the DIY [do-it-yourself shopper], that’s going to give us an indication that the consumer is getting healthier and they’re more confident in making those purchases,” he said.

He told CNBC that two changes could meaningfully move the needle for the industry: A pick-up in home sales or an increase in the use of home equity lines of credit. Homeowners may stick with their low fixed-mortgage rate, but tap the increased value of their home to redo their kitchen, finish a basement or build a deck.

“We think that as people stay locked in and they come to the realization that ‘I’m not going to give up this two and a half percent mortgage rate,’ they’re going to start investing in their home at some point,” he said.

Tariff policies, too, have injected fresh uncertainty for retailers after the Supreme Court on Friday ruled that some country-specific tariffs were illegal. Since then, President Donald Trump has announced a global duty of 10%, which he has suggested he could increase.

About 40% of Lowe’s goods are imported, Ellison told CNBC, which is lower than it used to be. He said Lowe’s can lean on its existing tariff playbook, which has gotten sharper in recent years, even as it calculates how its costs may shift.

As of Tuesday’s close, Lowe’s shares are up nearly 16% year to date, surpassing the S&P 500’s roughly 1% gains during the same period. Its stock has risen about 15% over the past year, almost matching the S&P 500’s approximately 16% gains over that time.